In the evenings, Alfred Toliver works telling fortunes using his friend Roger Greenes booth at the city

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In the evenings, Alfred Toliver works telling fortunes using his friend Roger Greene’s booth at the city market. Mr. Greene pays the booth rental, so Mr. Toliver has no rental cost. As a courtesy, Mr. Toliver provides each customer a soft drink. The drinks cost him $0.50 per customer.


Required

a. What is the soft drink cost both in total and per customer if the number of customers is 5, 10, 15, 20, or 25?

b. Is the soft drink cost fixed or variable?

c. Draw two graphs. On one, plot total soft drink cost for 5, 10, 15, 20, and 25 customers; on the other, plot soft drink cost per customer for 5, 10, 15, 20, and 25 customers.

d. Comment on the likelihood that Mr. Toliver will incur a loss on this business venture.


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Fundamental Managerial Accounting Concepts

ISBN: 978-0078025655

7th edition

Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old

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